Double Whammy for Corporates as Record Debt Payments Looming

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Indian companies have a record $11.4 billion of dollar-denominated bonds to repay in 2012 just as the rupee falls to an all-time low and borrowing costs in the U.S. currency exceed all but one of Asia’s markets. Companies have more than double the debt coming due next year compared with a five-year average of $5.6 billion, while ICICI Bank Ltd. and Bank of Baroda have the most maturing debt, according to data compiled by Bloomberg. Yields on Indian company dollar-denominated bonds have increased for five straight quarters and currently sit at 6.85 percent, the second- highest level among 11 Asian countries tracked by HSBC Holdings Plc. The rupee’s 15.5 percent drop against the dollar this year to the weakest level in data compiled by Bloomberg going back to 1973 makes paying back dollar debt more expensive for Indian companies earning income in rupees. Lower profits will damp economic growth that Prime Minister Manmohan Singh said will increase 7.5 percent in the fiscal year ending March 31. Read more.